If the present value for a sequence of payments made at the end of each 6 months and continuing forever is ₹6000. If the money is worth 4% compounded semi-annually, then, the value of sequence of payment made is:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → ₹120
$\text{Present value of perpetuity} = \frac{R}{i}$
$6000 = \frac{R}{i}$
$i = \frac{4\%}{2} = 2\% = 0.02$
$R = 6000 \times 0.02 = 120$
The payment each half-year is ₹120.